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Relaunching securitisation in the EU


Households, SMEs in the same way as large caps in the EU are facing unprecedented levels of investment to achieve digital and sustainable transitions. This underscores the essential role played by a well-functioning banking sector. The Covid19 crisis illustrated in addition that whenever financial markets collapse, banks represent a vital way to swiftly channel funds to the real economy where it is most necessary. Securitisation helps to partially remove credit risk from bank balance sheets and strengthen their capital ratios, enabling them to recycle and reallocate capital.

Since securitisation products played a significant role in the US subprime mortgage crisis beginning in 2007, despite the reliability of European securitisation markets, a deep overhaul of the framework has been achieved by EU institutions. A regulation includes now due diligence, risk retention and transparency rules in addition to a set of criteria that help identifying simple, transparent, and standardised (STS) securitisations.

In parallel specific more risk-sensitive capital requirements for banks and insurance undertakings, were intended to reflect the specific features of STS securitisations.

Yet, European securitisation markets have remained subdued. Does the disappointing limited recovery of these markets reflect concerns among investors regarding the risks associated with the securitisation process itself? Or does not it rather suggest that these EU prudential frameworks require urgent attention, should addressing the current unprecedented financing needs require being able in the EU, to permanently strengthen bank balance sheets?

Eurofi documents

Extracted from the main Eurofi publications (Regulatory Updates, Views Magazines and Conference Summaries)

Eurofi Views Magazine chapters

Private risk sharing and transfer: the role of securitisation - February 2024 new

Fausto Parente - European Insurance and Occupational Pensions Authority (EIOPA) | Jon Relleen - Financial Conduct Authority (FCA) | Cécile Nagel - BNY Mellon | Alexander Batchvarov - Bank of America

Securitisation in the EU - April 2023

Nathalie Aufauvre - Autorité de contrôle prudentiel et de résolution (ACPR) | Paul Tang - European Parliament | François-Louis Michaud - European Banking Authority (EBA) | Fausto Parente - European Insurance and Occupational Pensions Authority (EIOPA) | Christophe Delafontaine - BNP Paribas | Alexander Batchvarov - Bank of America

Securitisation in Europe - September 2022

Dominique Laboureix - Autorité de Contrôle Prudentiel et de Résolution | Fausto Parente - European Insurance and Occupational Pensions Authority | Philippe Bordenave - BNP Paribas | Alexander Batcharov - Bank of America | Mascha Canio - PGGM